Arizona consumers are expected to spend less individually this holiday season. Although overall holiday spending is likely to rise slightly.
But expect the overall increase to be at a slower pace than in recent years as economic uncertainty continues to weigh on shoppers, according to UA economist George W. Hammond.
Hammond, a research professor in economics with the University of Arizona Eller College of Management, said that end-of-the-year data is expected to show that job growth in 2025 dipped slightly and continued to trail the national average.
“It looks like job growth in 2025 is going to be a little bit slower than it was in 2024, which was already unusually low,” he said.
He pointed to three major factors weighing on Arizona’s economic momentum: federal economic policy uncertainty, tariffs and reduced international immigration accompanied by increased deportations.
“Those factors are reducing confidence among both businesses and consumers, and that’s not good for growth,” he said.
Income growth also has been sluggish, a trend Hammond said will likely put added pressure on holiday budgets.
According to ‘MAP’ — Making Actions Possible for Southern Arizona — median household income in Tucson has been relatively stagnant, leading to constrains on consumer spending.
For this reason Hammond said, “consumers may be a little more cautious this year than we’ve seen over the past couple of years.”
That caution is already visible among younger shoppers. UofA senior Reese Manross, who works part time while taking a full course load, said she has tightened her spending this December.
“I usually buy gifts for all of my loved ones, but this year I’m cutting back to just a few people,” she said. “Prices feel higher, and I’m trying to save more as I’m going to be graduating this year and need to figure out how I am going to fund my life.”
While some economists speculate that higher-income households may be weathering the slowdown more easily, Hammond said it is too early to know which groups will feel the most pressure this season.
Looking ahead, he expects modest improvement next year.
“I think we are going to see somewhat stronger growth as we go into 2026,” Hammond said. “It’s not a huge acceleration, but I do think we’ll see a little bit of tax relief next year, and that will help households.”
Hammond said overall holiday spending will likely increase slightly, but at a slower pace than in recent years as economic uncertainty continues to weigh on Arizona consumers.
Arizona Sonoran News is a news service of the University of Arizona School of Journalism.
